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Effort to Replace DOL Fiduciary Rule

A bipartisan group of House of Representatives members released “legislative principles”, offering an alternative to the pending DOL fiduciary rule proposal to raise investment advice standards for retirement accounts, previously introduced in April 2015. It is not clear when such a bill would be introduced or if the group will require the DOL to halt the current fiduciary rule.

The legislative principles include:

  • a requirement that advisers work in their clients’ best interests, providing “clear, simple and relevant disclosure of material conflicts”, inclusive of compensation and fees
  • preservation of proprietary products, commission-based sales and annuities

The introduction of such a revised bill would alleviate concerns that the DOL rule would have unintended negative consequences, due to the immediate changes that the retirement industry would have to impose and the likelihood that those changes could limit access to services and education for those saving to retire, especially low and middle class families. Critics of the revision believe the legislative principles emphasize only disclosure, as opposed to mitigation of such conflicts and enforcement of standards that would serve to protect investors from high-fee products that can erode retirement savings.

The final rule is expected early 2016 so it can be finalized before Obama leaves office.

bloombergnews; November 5, 2015.